Under the Outer Continental Shelf Lands Act, the Department of the Interior has responsibility for managing use and development of the federally controlled outer continental shelf and the waters above it. The Bureau of Ocean Energy Management exercises key functions in support of this role, managing resource evaluation, planning, and site leasing for energy activities ranging from oil and natural gas exploration and production to hydrokinetic, offshore wind, and other renewable ocean energy projects.

Since early in the Obama administration, BOEM has worked to offer leases to federal ocean sites for offshore wind development or related activities. To date, BOEM has awarded seven offshore wind site leases through competitive lease sales, plus two more commercial wind leases offshore New Jersey awarded through earlier interim policies. BOEM's competitive processes have generated over $14.5 million in high bids for over 700,000 acres in
federal waters off states including Massachusetts, Maryland, Virginia, and Rhode Island.

Since at least 2009, BOEM has been involved in efforts to lease sites off New Jersey for offshore wind development, including multiple task force meetings, a 2011 Call for Information and Nominations – Commercial Leasing for Wind Power on the Outer Continental Shelf Offshore New Jersey, and a 2014 Proposed Sale Notice. That notice described a 343,833-acre Wind Energy Area split in two parts, known for leasing as OCS-A 0498 and OCS-A 0499:

What explains the buildup of propane in storage? Record high propane inventories are partly due to seasonal dynamics in supply and demand. Demand for propane for heating and agricultural uses is highly seasonal, while demand for propane as a chemical feedstock lacks strong seasonality. Over recent years, propane and propylene stocks are typically drawn down during the winter heating and agricultural drying season (October to
March), and then rebuild from early April through September.

This year, EIA data shows
inventories began increasing in mid-February. EIA notes that domestic consumption is relatively flat, but found increases in propane production. In particular, EIA's latest data shows that natural gas processing plants are producing a greater share of propane than in previous years (rising from 62% in 2008 to 76% in 2014), while propane
production at refineries has remained relatively constant.

But according to the Public Advocate, Maine’s version of net metering raises concerns including net metering customers’ uncertainty over the future value of power, the potential for cost-shifting to non-net metered customers, and a lack of transparency.

For customer-sited systems, the white paper proposes a “Solar Standard Buyer” to serve as an aggregator of the attributes solar energy can provide. Customers would enter into a Customer-sited Solar Contract or CSC, a fixed-price, 20-year contract with the solar aggregator. As under Maine’s existing net metering structure, the “payment” to customers would be based on a per kWh rate that would appear as a monthly bill credit on the customer’s bill. Under the Public Advocate’s vision, the level of compensation would be capped at $0.20/kWh.

As more solar capacity comes online in Maine, the Public Advocate proposes incremental “step downs” in the CSC contract price paid to solar customers. Both the payments to customers under a CSC and the revenues received through this aggregation and sale would be credited to all customers through transmission and distribution utilities’ existing stranded cost mechanisms.

For wholesale systems between 1 megawatt and 5 megawatts in scale, the white paper envisions that the Commission would solicit competitive bids, with the ultimate purchaser being the Solar Standard Buyer. The white paper notes an expectation that economies of scale will enable these larger, utility-side solar projects to reduce the price per kilowatt-hour to Maine’s non-participating ratepayers. It proposes to compensate developers of wholesale systems at a fixed rate, with contracts procured by the state’s utilities through bi-annual competitive processes.

The Public Advocate suggests that its proposal is consistent with recent analysis of the value of solar energy in Maine. Pursuant to the 2014 “Act to Support Solar Energy Development in Maine”, the Maine Public Utilities Commission developed a methodology for determining the value of distributed solar energy generation in the state. Its Maine Distributed Solar Valuation Study, released this spring, provided a methodology for estimating the cost and benefits of solar, values for each cost and benefit, and options to encourage solar adoption within Maine’s existing utility framework.

According to the Public Advocate’s white paper, its proposal could drive up to 300 MW of new solar capacity in Maine by 2025. It has been characterized as an addition to net metering, not a replacement. But the Maine Public Utilities Commission continues to evaluate Maine’s solar energy policies. Its process could have outcomes ranging from continuation of Maine's net energy billing programs to the creation of some new mechanism to address solar and distributed generation's integration into the grid.

Tuesday, September 22, 2015

Federal efforts to lease ocean sites off the North Carolina coast for offshore wind development advanced last week, when the Bureau of Ocean Energy Management issued a report finding that there would be no significant environmental or socioeconomic impacts from issuing wind energy leases in three specific areas. The determination brings BOEM one step closer to auctioning off leasing rights off North Carolina for offshore wind development.

That next step will occur in October, when BOEM will convene a public meeting of the North Carolina Renewable Energy Task Force. After considering the input from the Task Force, BOEM will publish a “Proposed Sale Notice” in the Federal Register, which will include
a 60-day public comment period. That notice would be followed by a lease auction, likely similar to those held for sites off other states.

In addition to its proposed North Carolina activity, BOEM expects to hold a competitive lease sale for sites offshore New Jersey later this year.

Vivint Solar describes itself as the second largest
installer
of residential solar energy systems in
the U.S.
residential market,
with
approximately
42,000
residential customers and
274
megawatts of
solar systems installed. The company describes two primary business structures for residential solar projects: long-term power purchase agreements or PPAs, under which a customer agrees to purchase all of the power generated by a solar energy system installed on the customer’s rooftop; and solar leases, under which a customer leases the solar energy system which is installed at the customer’s site. In either case, the solar facilities are owned by Vivint Solar’s affiliates and financing parties to enable efficient use of tax benefits and low-to-no upfront costs for customers.

In its August 14, 2015 petition, Vivint Solar asked New Hampshire regulators for “regulatory clarity on how it may be regulated” if it enters the state to offer its PPAs and solar leases to New Hampshire customers. In particular, Vivint Solar argues that because it would not sell the electricity generated by its solar energy systems to the broad “public,” it is not a public utility under New Hampshire law. Vivint Solar also argues that its contractual relationship with residential customers is fundamentally different from the relationship between a competitive electric power suppliers and its customers, largely because Vivint Solar’s activity occurs on the customer’s side of the utility meter. The company also asks the Commission to declare that it would not be a limited producer of electric energy, a kind of generator regulated lightly by the Commission.
Vivint Solar also notes that its PPAs and solar leases promote New Hampshire’s goal of encouraging competition for retail access, and customer choice for more affordable electricity, as well as New Hampshire’s renewable portfolio standard and other clean energy policies.

Friday, September 18, 2015

New Hampshire regulators are considering whether and how to modernize
the state’s electric grid. In a recently opened investigation, the New
Hampshire Public Utilities Commission seeks to educate stakeholders
about grid modernization and to explore to what extent that grid
modernization is workable in New Hampshire.

Last year, the New Hampshire Office of Energy & Planning issued its 10-Year State Energy Strategy.
In that document, the administration called for "a
more
flexible
and
resilient
electric
grid
to
support
new
technologies,
increase
consumer
participation
in
energy
management,
and
fortify
our
resiliency
in
the
face
of
price
and
supply
volatility
and
extreme
weather
events." The first step identified in the Energy Strategy was to open a PUC docket on grid modernization:

The
electric
grid
is
aging,
and
changing
consumer
use
patterns,
a
new
generation
mix,
and
increased
threats
from
severe
weather
events
require
a
more
modern
system.
The
New
Hampshire
Public
Utilities
Commission
should
open
a
docket
to
determine
how
to
advance
grid
modernization
in
the
state.
In
light
of
the
potential
breadth
of
the
topic, which
could
include
dynamic
pricing,
better
consumer
access
to
technology,
and
even
rethinking
the
role
of
utilities,
an
investigation
or
information
‐
gathering
proceeding
may
be
an
appropriate
first
step.
This
less
formal
proceeding
would
give
all
stakeholders
a
chance
to
learn
about
grid
modernization
and
could
inform
the
specific
areas
that
should
be
pursued
within
future
dockets.
This
would
allow
the
PUC
and
stakeholders
to
determine
which
approaches
will
benefit
New
Hampshire
consumers,
and
when
and
how
they
should
be
implemented.

That process is now underway. The New Hampshire Public Utilities Commission opened its investigation by order dated July 30, 2015.
The Commission gave interested
parties
until
September
17,
2015
to
provide
comment
on
the
definition,
or
elements,
of
grid
modernization
that
should
be
included
in
its investigation. The Commission
directed its staff to schedule a technical session following a review of comments submitted, and to develop a
procedural schedule for the rest of the case.

Thursday, September 17, 2015

The Maine Public Utilities Commission is evaluating the viability of proposed community-based renewable energy projects that remain under development.

Maine has run a community-based renewable energy program since 2009. The program gives qualified wind, solar, and other renewable energy projects long-term contracting opportunities to sell the
facility’s output to a Maine transmission and distribution utility at attractive rates.

In 2015, the Maine Legislature adopted P.L. 2015 ch. 232, An Act to Amend the Community-based Renewable Energy Program”. Beyond minor revisions to the law, the act adds strict deadlines for key program milestones: the Public Utilities Commission has until December 31, 2015 to order or allow utilities to enter into long-term contracts under the program, and all projects selected for a contract must become operational and commence generating electricity by December 31, 2018.

Section 5 of the Act also created a new "viability assessment" process designed to make sure the program is as effective as possible. The program size is capped at 50 megawatts statewide; all of this capacity was quickly claimed by certified projects. But not all projects that have been certified are operational; some have yet to be built. Some stakeholders expressed concern over "permit banking" -- developers obtaining and holding onto program capacity, without actively developing it, while other projects would move forward if they could get the capacity.

As a result, the Legislature directed the Commission to review all certified projects that have not yet reached commercial operations, to determine whether the projects are reasonably likely to achieve commercial operations within a 3-year period. If the Commission determines a project will not be viable by December 31, 2018, the Act directs the Commission to revoke any contract awarded, but such projects will remain certified under the program. If the removal of nonviable projects frees up program capacity for contracting, the law directs the Commission to conduct an expedited request for proposals to select
community-based renewable energy projects to become program participants and enter
into long-term contracts.

The Commission's viability assessment process is now ongoing. A July 13, 2015 procedural order identified six projects as having been either certified or awarded a contract, but not been placed in commercial operation. Project developers were invited to submit information related to the viability assessment by August 7.

In June 2015, the Connecticut legislature passed a sweeping bill formally known as June Special Session Public Act 15-5, An Act Implementing Provisions of the State Budget for the Biennium Ending June 30, 2017, Concerning General Government, Education, Health and Human Services and Bonds of the State (“the Act”). Section 103 of the Act requires Connecticut electric distribution companies to submit a proposal or proposals to DEEP for demonstration projects to build, own, or operate grid-side system enhancements, such as energy storage systems. Proposals are supposed to:

Demonstrate and investigate how distributed energy resources (DER) can be reliably and efficiently integrated into the electric distribution system;

Maximize the value provided to the electric grid, electric ratepayers, and the public from distributed energy resources; and

Complement and enhance the programs, products, and incentives available through the Connecticut Green Bank, the Connecticut Energy Efficiency Fund, and other similar programs.

As an initial step in the implementation of this program, DEEP has opened a proceeding to establish priority goals and objectives for the DER Integration Demonstration Projects. The proceeding includes opportunity for public comment, as well as a stakeholder workshop scheduled for October 5.

Ultimately, Connecticut's electric distribution companies will propose specific demonstration projects for approval first by DEEP, then by the Connecticut Public Utilities Regulatory Authority or PURA. Much emphasis has been placed on energy storage systems as a likely beneficiary of the program. Other grid-side system enhancements could include distribution system automation and controls, intelligent field systems, advanced distribution system metering, communication, and systems that enable two-way power flow. DEEP has until January 1, 2017 to evaluate the approved proposals and report to the state's legislative committee with jurisdiction over energy.

The 2015 report notes, "The last four years have been defined by dramatic change in the nation’s energy landscape." Huge growth in domestic production of oil and natural gas has made the U.S. the world leader in combined oil and natural gas
production for the last three consecutive years. Wind energy capacity has increased by 65 percent and wind energy generation has nearly doubled; solar capacity has increased
9 fold and solar photovoltaic generation over tenfold; old, inefficient
power plants are being replaced by cleaner, more efficient ones; transportation efficiencies continue to improve.

It also highlights the Energy Department's view of "the most promising research, development, demonstration, and deployment
(RDD&D) opportunities across energy technologies to effectively
address the nation's energy needs. Specifically, this analysis
identifies the important technology RDD&D opportunities across
energy supply and end use in working toward a clean energy economy in
the United States." Individual chapters focus on specific technology types, including
grid modernization, clean power, buildings, manufacturing, fuels, and
transportation.

The report also draws some overarching conclusions:

Energy systems are increasingly interconnected through the internet and other technologies,
which could enable new paradigms for cost and emissions
reduction.

Increasingly diverse options are available to meet the nation’s energy needs is
increasing, creating a more dependable and flexible energy
system for consumers.

Substantial energy efficiency opportunities remain untapped.

More research and development could lead to innovation and breakthroughs in how to
deliver clean energy cheaper and faster.

Maine restructured its electricity sector in the late 1990s. Formerly, utilities owned both power plants and the wires and other infrastructure needed to supply consumers with electricity. But as of March 1, 2000, investor-owned transmission and distribution utilities may own and operate wires, but generally cannot have a financial
interest in or otherwise control generation or generation-related assets. Power plants became "deregulated" from the perspective of state retail rate regulation, and were sold off by the utilities. At the same time, Maine law created a new kind of entity called a "competitive electricity provider" to perform the role of supplying electricity as a commodity.

If a customer does not choose a competitive electricity provider, that customer is placed on "standard offer service" by default. Maine law requires the Maine Public Utilities Commission to arrange for standard offer service
though a competitive bid process, and to ensure that standard offer
service is available to all customers in Maine.

The pending RFPs cover retail electricity standard offer service for calendar year 2016 for all customer classes in
the territories of Central Maine Power (CMP) and Emera Maine-Bangor
Hydro District. Collectively, CMP and Emera Maine deliver
approximately eleven million megawatt hours annually, of which about 45%
currently comes from standard offer service.

In 2005, Congress established a federal loan guarantee program for eligible
energy projects that employed
innovative technologies. Title XVII of the Energy Policy Act of 2005 authorized the Secretary of Energy to make loan guarantees for a variety of types of projects, including those that
“avoid, reduce, or sequester air pollutants or anthropogenic emissions of
greenhouse gases; and
employ new or significantly improved technologies as compared to commercial technologies in
service in the United States at the time the guarantee is issued.”

The Department made its first award under this program in September 2009, approving a $535 million loan guarantee to a company called Solyndra, Inc. Solyndra said it would build a solar photovoltaic equipment manufacturing facility in Fremont, California. The Energy Department disbursed over $500 million to Solyndra through the program. But just two years later, Solyndra showed signs of failure, as it ultimately stopped operations and manufacturing, let 1,100 employees go, and filed for bankruptcy. U.S taxpayers lost over $500 million.

The Solyndra matter drew significant public attention, with even the Department calling it an "ordeal" and many labeling it a scandal. What went wrong? Should the government have guaranteed Solyndra's loans? Was the loan guarantee program flawed? Or was it acceptable bad luck that the first awardee failed?

Our investigation confirmed that
during the loan guarantee application process and while drawing
down loan proceeds,
Solyndra provided the Department with statements, assertions
,
and
certifications
that
were inaccurate and misleading
,
misrepresented known
facts
,
and, in some
instances, omitted
information
that was highly relevant to key decisions in the process to award and
execute the $535 million loan guarantee.
In our view,
the investigative record suggests that the
actions of certain Solyndra officials
were, at best, reckless and irresponsible or, at worst, an
orchestrated effort to knowingly and intentionally deceive and mislead the Department.

In particular, the report identified "notable misrepresentations and omissions made to the Department by Solyndra" relating to Solyndra's sales contract commitments and ability to command a premium market price for its panels. The report suggests this false and misleading information led the Department to approve the loan guarantee, when it might not have done so with the right information. The report found that Solyndra failed to meet contractual obligations from the loan guarantee documents relating to truth and full disclosure.

The Inspector General's special report also found that the Energy Department's due diligence efforts were "less than fully effective", with missed opportunities
to
detect and resolve indicators that portions of the data provided by Solyndra were unreliable. Nevertheless, the report concludes that ultimate blame should fall on the company: "the actions of
the
Solyndra officials were at the heart of this matter, and they
effectively undermined
the Department’s efforts to manage the loan guarantee process. In so doing,
they placed more than $500 million in U.S. taxpayers’
funds in jeopardy."

The Department of Energy continues to offer loan guarantees for a variety of technologies and projects. The report suggests that the Department strengthen its due diligence process, and reemphasize to loan applicants their absolute obligation to be truthful, complete, timely and transparent.

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About this blog

A blog about energy resources, energy policy, and their effects on society and the environment. From fossil fuels to renewable energy, electricity to natural gas and oil, traditional technologies to innovations, this blog presents a look at the past, present, and future of energy.

This blog site is published by and reflects the personal views of Todd Griset, in his individual capacity. It does not necessarily represent the views of his law firm or clients, and is not sponsored or endorsed by them. The purpose of this blog site is to assist in dissemination of information about energy policy and related issues, but no representation is made about the accuracy of the information. The information contained in this blog site is provided only as general information for education purposes, and blog topics may or may not be updated subsequent to their initial posting.

By using this blog site you understand that this information is not provided in the course of an attorney-client relationship and is not intended to constitute legal advice. This blog site should not be used as a substitute for competent legal advice from a licensed attorney in your state. This blog site is not intended to be advertising and Todd Griset does not wish to represent anyone desiring representation based upon viewing this blog site in a state where this blog site fails to comply with all laws and ethical rules of that state.